Question 1

Standard cost systems value products according to actual costs.

Accepted Answer

A) True 
 B)False

Question 2

Identify which statement below about "currently attainable standards" is not true.

Accepted Answer

A) They allow for normal spoilage and nonproductive time. 
B) Because they allow for waste, they usually result in favorable variances. 
C) They represent projections of what will probably be attained. 
D) Employees usually view these goals as reasonable. 
A) They allow for normal spoilage and nonproductive time. 
B) Because they allow for waste, they usually result in favorable variances. 
C) They represent projections of what will probably be attained. 
D) Employees usually view these goals as reasonable.

Question 3

A static budget is another name for the _____budget.

Accepted Answer

A) financial 
B) operating 
C) strategic 
D) master 
A) financial 
B) operating 
C) strategic 
D) master

Question 4

Actual results might differ from the static budget because _____.

Accepted Answer

A) sales and other cost-driver activities were not the same as originally forecasted 
B) revenues or variable costs per unit of activity were not as expected 
C) fixed costs per period were not as expected 
D) all of these answers are correct 
A) sales and other cost-driver activities were not the same as originally forecasted 
B) revenues or variable costs per unit of activity were not as expected 
C) fixed costs per period were not as expected 
D) all of these answers are correct

Question 5

Variances are signals that actual operations are different from what was anticipated.

Accepted Answer

A) True 
 B)False

Question 6

The Long Company makes tables for which the following standards have been developed: $\begin{array}{cc}
&\text { Standard Inputs } & \text { Standard Frice } \
&\text { Expected for Each } & \text { Expected per } \
&\text { Unit of Output } & \text { Unit of Output }\\hline
\text { Direct materials } & 12 \text { pounds } & \$ 4 \text { per pound } \
\text { Direct labor } & 4 \text { hours } & \$ 30 \text { per hour }
\end{array}$ Production of 200 tables was expected in August, but 220 tables were actually completed. Direct materials purchased and used were 2,100 pounds at an actual price of $4.40 per pound.Direct-labor cost for the month was $10,620, and the actual pay per hour was $18.00._____ is the standard labor cost for each table produced.

Accepted Answer

A) $20 
B) $120 
C) $48 
D) $4 
A) $20 
B) $120 
C) $48 
D) $4

Question 7

Black Company planned to produce and sell 900 units at a total cost of $180,000.Actual production was 900 units at a cost of $170,000, Black Company was _____.

Accepted Answer

A) efficient 
B) inefficient 
C) effective 
D) ineffective 
A) efficient 
B) inefficient 
C) effective 
D) ineffective

Question 8

Identify which statement below would not be a possible reason for a variance between a flexible budget and actual results.

Accepted Answer

A) Material prices were different than expected. 
B) Labor prices were different than expected. 
C) The actual volume of activity was different than expected. 
D) The amount of labor used per unit of output was different than expected. 
A) Material prices were different than expected. 
B) Labor prices were different than expected. 
C) The actual volume of activity was different than expected. 
D) The amount of labor used per unit of output was different than expected.

Question 9

The Foot Company currently produces sandals in an automated process. Expected produc?tion per month is 20,000 units.The required direct materials cost is $1.50 per unit.Manufacturing fixed overhead costs are $30,000 per month.Manufac?turing overhead is allocated based on units of production._____ is the flexible budget for 15,000 and 20,000 units, respectively.

Accepted Answer

A) $22,500 and $30,000 
B) $52,500 and $60,000 
C) $45,000 and $60,000 
D) $88,000 and $76,000 
A) $22,500 and $30,000 
B) $52,500 and $60,000 
C) $45,000 and $60,000 
D) $88,000 and $76,000

Question 10

A price variance is favorable if _____.

Accepted Answer

A) standard cost exceeds actual cost 
B) standard quantity exceeds actual quantity 
C) actual cost exceeds standard cost 
D) actual quantity exceeds standard quantity 
A) standard cost exceeds actual cost 
B) standard quantity exceeds actual quantity 
C) actual cost exceeds standard cost 
D) actual quantity exceeds standard quantity

Question 11

Actual output in units measured in standard direct-labor hours

Accepted Answer

Standard h

Question 12

The overhead efficiency variance indicates to management how much overhead cost it may waste by not controlling the use of cost-driver activity.

Accepted Answer

A) True 
 B)False

Question 13

This is another name for the flexible budget

Accepted Answer

The answer of This is another name for the flexible...

Question 14

If the total sales-activity variance was $8,000 favorable, and the total static-budget variance was $10,000 favorable, then the total flexible-budget variance must have been:

Accepted Answer

A) $18,000 favorable 
B) $2,000 favorable 
C) $2,000 unfavorable 
D) indeterminable 
A) $18,000 favorable 
B) $2,000 favorable 
C) $2,000 unfavorable 
D) indeterminable

Question 15

Sales-activity variances measure how efficient managers have been in meeting the planned sales objective.

Accepted Answer

A) True 
 B)False

Question 16

The following data for the Popular Company pertain to the produc?tion of 2,000 clay pigeons during July: Standard variable-overhead cost was $6.00 per pound of clay.
Total actual variable-overhead cost was $18,200.
Standard variable-overhead cost allowed for units produced was $20,000.
Variable overhead-efficiency variance was $740 unfavorable.
_____ is standard direct-material amount per clay pigeon.

Accepted Answer

A) 1.67 pound 
B) 3.50 pounds 
C) 6.00 pounds 
D) 10.00 pounds 
A) 1.67 pound 
B) 3.50 pounds 
C) 6.00 pounds 
D) 10.00 pounds

Question 17

The most recent operating budget for Skipper Company is based on production of 42,000 units with 1.0 machine hour allowed per unit.Variable manufacturing overhead is anticipated to be $20 per unit.Actual production was 45,000 units using 40,000 machine hours.Actual variable cost was $725,000.
Required:
Compute the commonly used variances for a variable over?head report.Do not prepare the report.

Accepted Answer

Spending variance = $725,000 -

Question 18

The Cheers Company makes mugs for which the following standards have been developed: $\begin{array}{cc}
&\text { Standard Inputs } & \text { Standard Frice } \
&\text { Expected for Each } & \text { Expected per } \
&\text { Unit of Output } & \text { Unit of Output }\\hline
\text { Direct materials } & 5 \text { ounces } & \$ 2 \text { per ounce } \
\text { Direct labor } & 1.5 \text { hours } & \$ 8 \text { per hour }
\end{array}$ Production of 400 mugs was expected in July, but 440 mugs were actually completed. Direct materials purchased and used were 2,100 ounces at an actual price of $2.20 per ounce.Direct-labor cost for the month was $5,310, and the actual pay per hour was $9.00._____ is the direct-material quantity variance for July.

Accepted Answer

A) $220 unfavorable 
B) $220 favorable 
C) $200 unfavorable 
D) $200 favorable 
A) $220 unfavorable 
B) $220 favorable 
C) $200 unfavorable 
D) $200 favorable

Question 19

Actual price - standard price) x actual quantity of labor

Accepted Answer

Direct-lab

Question 20

Flat Company currently produces cardboard boxes in an automated process.Expected produc?tion per month is 40,000 units.The required direct materials cost $0.30 per unit.Manufacturing fixed overhead costs are $24,000 per month.Manufacturing overhead is allocated based on units of production.____ is the flexible budget for 40,000 and 20,000 units, respectively.

Accepted Answer

A) $26,000 and $20,000 
B) $36,000 and $30,000 
C) $40,000 and $34,000 
D) $44,000 and $38,000 
A) $26,000 and $20,000 
B) $36,000 and $30,000 
C) $40,000 and $34,000 
D) $44,000 and $38,000

Standard cost systems value products according to actual costs.

Identify which statement below about "currently attainable standards" is not true.

A static budget is another name for the _____budget.

Actual results might differ from the static budget because _____.

Variances are signals that actual operations are different from what was anticipated.

Black Company planned to produce and sell 900 units at a total cost of $180,000.Actual production was 900 units at a cost of $170,000, Black Company was _____.

Identify which statement below would not be a possible reason for a variance between a flexible budget and actual results.

A price variance is favorable if _____.

Actual output in units measured in standard direct-labor hours

The overhead efficiency variance indicates to management how much overhead cost it may waste by not controlling the use of cost-driver activity.

This is another name for the flexible budget

If the total sales-activity variance was $8,000 favorable, and the total static-budget variance was $10,000 favorable, then the total flexible-budget variance must have been:

Sales-activity variances measure how efficient managers have been in meeting the planned sales objective.

Actual price - standard price) x actual quantity of labor

Managerial Accounting, the Business Organization, and Professional Ethics

Introduction to Cost Behavior and Cost-Volume Relationships

Measurement of Cost Behavior

Cost Management Systems and an Introduction to Activity-Based Costing

Relevant Information and Decision Making With a Focus on Pricing Decisions

Relevant Information and Decision Making: Operational Decisions

Introduction to Budgets and Preparing the Master Budget

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Cost Allocation

Accounting for Overhead Costs

Job-Costing and Process-Costing Systems

Basic Accounting: Concepts, Techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Understanding and Analyzing Consolidated Financial Statements

Filters

Exam 8: Flexible Budgets and Variance Analysis

Standard cost systems value products according to actual costs.

Identify which statement below about "currently attainable standards" is not true.

A static budget is another name for the _____budget.

Actual results might differ from the static budget because _____.

Variances are signals that actual operations are different from what was anticipated.

Black Company planned to produce and sell 900 units at a total cost of $180,000.Actual production was 900 units at a cost of $170,000, Black Company was _____.

Identify which statement below would not be a possible reason for a variance between a flexible budget and actual results.

A price variance is favorable if _____.

Actual output in units measured in standard direct-labor hours

The overhead efficiency variance indicates to management how much overhead cost it may waste by not controlling the use of cost-driver activity.

This is another name for the flexible budget

If the total sales-activity variance was $8,000 favorable, and the total static-budget variance was $10,000 favorable, then the total flexible-budget variance must have been:

Sales-activity variances measure how efficient managers have been in meeting the planned sales objective.

Actual price - standard price) x actual quantity of labor

Managerial Accounting, the Business Organization, and Professional Ethics

Introduction to Cost Behavior and Cost-Volume Relationships

Measurement of Cost Behavior

Cost Management Systems and an Introduction to Activity-Based Costing

Relevant Information and Decision Making With a Focus on Pricing Decisions

Relevant Information and Decision Making: Operational Decisions

Introduction to Budgets and Preparing the Master Budget

Management Control Systems and Responsibility Accounting

Management Control in Decentralized Organizations

Capital Budgeting

Cost Allocation

Accounting for Overhead Costs

Job-Costing and Process-Costing Systems

Basic Accounting: Concepts, Techniques, and Conventions

Understanding Corporate Annual Reports: Basic Financial Statements

Understanding and Analyzing Consolidated Financial Statements

Filters